Since expanding its footprint globally, the Italian coffee retailer has been making big investments in India and is opening a new line of coffee stores.

From Barista to Lavazza India, your operations in India have gone through quite a few changes. How do you see the brand evolving in the days ahead?

The way we have envisaged our business model is different from the traditional café management. We have introduced shops which are franchise-owned or managed directly by us. Lavazza entered India in 2007 when it acquired Barista (based in Bangalore), and Fresh & HonestCafée Ltd (based in Chennai). Over the past four years Lavazza has been in the process of consolidating its business. Also, we aim to further enhance our share in the dynamic Indian coffee market. Today, the Lavazza logo is present on all the three brands (Barista Lavazza, Fresh & Honest, Lavazza Espression) owned by the company.

Lavazza Espression is a completely new chain you’ve started. What’s the idea behind its launch, considering you already own Barista Lavazza, which you could have extended?

If you look at our Italian model, we never felt the need for a proper coffee chain. In Italy, Lavazza is mainly served in bars. But outside of Italy, the tradition of coffee drinking is totally different. So we felt the need to showcase our products and offer international consumers a standard experience of Lavazza in terms of environment, menu and products. Lavazza Espression is targeted towards those who like to experiment with new tastes, and share an affinity for the European way of life. Starting in 2007, we now have over 30 Lavazza Espression stores internationally, in cities like Barcelona, Turin, Dublin, London, Shanghai, Beijing, New Delhi, Chicago et al. We have opened our first Lavazza Espression shop in New Delhi, and plan to cover all the key metros in the next 12-18 months. Espression’s USP lies in innovation in the product’s offer and its original creative environment, marked by exclusive and very modern design.

What is your overall investment in the Indian market?
Since 2007 when we started in India, we have invested close to Rs. 600 crore in acquisition of Fresh & Honest and Barista. A large part of that money will also be invested in a new factory we are setting up in 7-8 months time on the Andhra Pradesh-Tamil Nadu border in Sri City, for producing roasted coffee.

Starbucks will soon launch its operations in India? Is that the reason for your new international chain?
We have an advantage over Starbucks in terms of making our first move in India in 2007. So we are no longer a newcomer to this market. Espression would have come here anyway, regardless of Starbucks coming here or not. Competition will only help the coffee culture grow in India. The market potential is huge and still very much open. Just to give you a perspective, in India the per-capita consumption of coffee is just 60 grams, while it is 5 kg in Italy, and the ratio between coffee and tea consumption is 1:7. So there’s huge growth potential.

Where do you place yourself in terms of increased competition in this space?
Right now CCD is the biggest player, and anyone who comes to India will have to face them. But we are not fighting any battle right now. We are positioned in a different space, we are not interested in numbers like opening 3,000 coffee stores around the country. For us coffee shops are a way to reach consumers. We are not dependant on it for business. Like CCD, Starbucks are the masters of coffee shops worldwide, they stand for the coffee shop business. For us it’s different, our focus is more on the retail side of the coffee business.

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Source : IIPM Editorial, 2012

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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